Govt eases CEO, top brass pay disclosure norms for companies

The government on Friday eased disclosure norms by companies on their top executive payouts while doing away with the need to explain the link between their salaries and increments with business performance.

The yearly remuneration threshold that triggers compulsory disclosure of employee salaries has also been raised to Rs 1.02 crore from the previous level of Rs 60 lakh. With the easing of norms, companies would also not be required to disclose the key parameters for any variable component of remuneration availed by their directors.

In this regard, the Ministry has made amendments to the ‘Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014’. A company would now only have to disclose salary details of individuals -- employed with a company throughout a financial year -- who have earned at least Rs 1.02 crore annual remuneration.

Earlier the same stood at Rs 60 lakh. In the case of a staff, employed for a part of a fiscal, the disclosure threshold would be a minimum of Rs 80.5 lakh monthly salary whereas earlier the level was Rs 5 lakh. Instead of the rule being applicable to any employee getting this quantum of remuneration, the company now has to disclose details of only top ten people in terms of salaries.

Under the revised rules, companies would not be required to explain the relationship between average increase in remuneration and company performance or provide comparison of key managerial personnel salary against overall business performance.

Besides, the need to disclose variations in the market capitalisation, price earnings ratio and net worth has been done away with. “... comparison of the each remuneration of the key managerial personnel against the performance of the company” would not be needed to be disclosed now.

Earlier, a company was required to file a return of appointment of a Managing Director, Whole Time Director,CEO, CFO and Company Secretary.

This was to be done in 60 days from the date of appointment. With the latest changes, CEO, CFO and Company Secretary have been exempted from this requirement.